The year 2019 is rapidly shaping to become the ultimate year for investors as floodgates open to two previously shunned markets: cannabis and cryptocurrency. Legalization for cannabis is becoming pervasive in different parts of the world while the formerly distrusted digital currencies penetrate the mainstream market. The playing field has, therefore, become conducive for companies like Facebook, Inc (NASDAQ: FB), CLIC Technology (OTCMKTS: CLCI), Origin House (CSE:OH, OTCQX:ORHOF), Horizons Marijuana Life Sciences ETF (TSE:HMMJ), and Village Farms International Inc (NASDAQ: VFF).
The cryptocurrency in the year 2019
When a certain individual named Satoshi Nakamoto released a paper titled “Bitcoin – A Peer Electronic Cash Systems” in 2008, the digital currency had been marred with controversies for the next three to five years. The most popular digital currency was shunned by big financial intuitions, calling it a scam and fraudulent. To date, the true identity or identities behind the name Satoshi Nakamoto remained a mystery. As with Bitcoin, it has persisted and has proven its worth at present.
In June, Bitcoin reached more than $9,000. Bitcoin analyst Oliver Isaacs predicts that Bitcoin will soon be hitting $25,000 by the end of this year. One catalyst to its rise is the increased adoption by the mainstream participants such as Microsoft, Amazon, Whole Foods and most recently Facebook
The cannabis industry in the year 2019
The cannabis industry is coming from significant developments that took place in 2018. In October 2018, Canada moved to legalize the recreational cannabis at the federal level. The country is also on track in legalizing edibles by the same month this year.
In December of the same year, the United States passed the 2018 Farm Bill that legalized hemp at the federal level. The country is also in the process of streamlining all federal laws that will guide government agencies in handling cannabis businesses.
In line with this, analysts said cannabis companies should expect a significant jump in worldwide consumers’ spending in 2019, up 38 percent from $16.9 billion. To compare, people spent an estimated $12.2 billion in 2018. By 2022, cannabis spending will reach $31.3 billion internationally.
The game-changer of the cannabis and crypto industry
Although with the passing of the 2018 Farm Bill, marijuana remains to be largely illegal at the federal level in the U.S. This is so because the Farm Bill only removed hemp under the category of controlled substances and not its cousin plant marijuana. While there are 33 states where medical marijuana is allowed and 11 states where both medical and recreational marijuana are legal, cannabis companies are operating under tough regulatory measures.
For one, banks are prohibited from handling or managing finances for cannabis companies. Even in Canada, where both medical and recreational cannabis is legal at the federal level, banks were keen to distance themselves from cannabis companies, particularly if they wish to operate in the U.S.
This landscape proves to be beneficial for a Florida-based company, CLIC Technology. To be clear, CLIC’s core business is not cannabis but cryptocurrency. The company offers blockchain services for big retailers and merchants. Its platform allows consumers to pay using digital currencies that are convertible to traditional fiat currencies for merchants’ disposal.
In June, CLIC Technology welcomed LeafyQuick CBD Delivery Service, the first cannabis merchant on its platform. The Chicago-based cannabis operator has registered for ClicPay Merchant Gateway which can convert digital currencies into local currencies within 24 hours.
LeafyQuick’s services involve delivering CBD products from local retailers straight to consumers. The company’s platform works like an online shopping website where shoppers can browse through brands, compare prices, and leave product reviews, except that LeafyQuick is entirely exclusive to CBD products.
In its announcement of its first cannabis merchant on its platform, CLIC hinted that having LeafyQuick on board is only the beginning. Soon, it will welcome more cannabis companies facing tough regulatory measures with regard to payment methods. Together, they will be changing the landscape of how payments are being transacted within the cannabis industry.
“We are extremely excited to be working with LeafyQuick, and to be able to help move the CBD industry forward…Turning cryptocurrency into everyday fiat is going to be a game-changer for many in the industry,” CLIC Technology CEO Roman Bond said.
As proof of how powerful CLIC Technology in terms of “changing the game” is, the company has recently partnered with B2B platform Opporty in launching a browser extension that will make it possible for Amazon shoppers to pay using the cryptocurrency Ether. Moving forward, Bond sees CLIC realizing more ambitious projects like this.
Facebook to launch its own cryptocurrency
On June 18, Facebook founder Mark Zuckerberg surprised the market when he personally announced that the social media giant, together with 27 other organizations, created a digital currency called Libra. Facebook and the organizations formed what he said was a non-profit group called Libra Association. Members of the organization include Visa, MasterCard, Paypal, Coinbase, as well as venture capital firms like Andreessen Horowitz and Union Square Ventures.
“Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world. It’s powered by blockchain technology and the plan is to launch it in 2020,” Zuckerberg wrote in his announcement.
As soon as Libra is officially working, a roster of companies will begin to use the currency on their platforms. Among these companies are PayU, Stripe, Booking, eBay, Farfetch, Lyft, Spotify, Uber as well as those companies working with non-profits such as Kiva, Mercy Corps, and Women’s World Banking. Libra will also be available on Anchorage, Coinbase, Xapo, and Bison Trails.
In line with its announcement of its own digital currency, Facebook is also launching the Calibra, an independent subsidiary that will allow users to transact using Libra. Calibra will feature a digital wallet that will be accessible via WhatsApp and Messenger and a yet to be named standalone app to be unveiled in 2020.
“[Calibra] is especially important for people who don’t have access to traditional banks or financial services. Right now, there are around a billion people who don’t have a bank account but do have a mobile phone. We aspire to make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos,” Zuckerberg wrote.
Cryptocurrency and the mainstream media
Starting on June 13, 2019, as many as 500,000 traditional traders using Reuters and Bloomberg terminals will also be able to access Cryptoindex, a platform where the top 100 performing coins are rebalanced by an intelligent network algorithm.
Cryptoindex works similarly with how major indices are operating. For instance, Dow, S&P 500, and NASDAQ monitors performance of the stocks of the big companies. Cryptoindex operates just like that, analyzing more than 33 terabytes of data on 1,800 digital coins but only featuring the top 100 best performers. A platform such as Cryptoindex is the best demonstration of how digital coins have evolved as an integral part of the mainstream financial industry.
The largest-ever public cannabis company acquisition
On April 1, Origin House (CSE:OH, OTCQX:ORHOF) has been the subject of planned acquisition which has been so far pegged as the largest-ever of a publicly traded company. Origin House is to be acquired by Cresco Labs, a multi-state cannabis cultivator, processor, and retailer headquartered in Chicago.
Origin House will be a smart buy so to speak for the Chicago-based company as it has been a leading distributor and provider of services in California which cannabis market is estimated to be more than $5.1 billion in market value within this year. The state is the biggest to legalized recreational cannabis in the U.S. since Jan. 1, 2018. To date, Origin House supplies more than 50 cannabis brands to over 500 dispensaries in California. This represents about 60 percent of the market share in the state.
As of June, the majority of Origin House shareholders agreed to the proposed deal. The next step will be for Origin House to submit more information on the proposal as requested by the U.S. Department of Justice Antitrust Division. Also, both Cresco and Origin House are waiting for Canada’s approval of the acquisition. Rest assured, both companies are keen to submit all requested paperwork, according to Origin House CEO Marc Lustig.
While the deal is technically not in effect yet, the two companies are already looking forward into becoming a “North American cannabis powerhouse” – an ambition which is highly possible. As noted by observers, their independent revenue when combined together will be bigger to that of the combined revenue of Cronos and Tilray which at present are referred to as the big leagues of cannabis stocks.
With that projected revenue, it will be understandable for Cresco to believe that with Origin House under its belt, whatever company that will be born out of the acquisition will be among the largest in terms of market cap. Together, they could set footprints to more than 11 U.S. states aside from different Canadian provinces, reaching an estimated additional market of about 185 million people.
One marijuana ETF hits the jackpot
Horizons Marijuana Life Sciences ETF (TSE:HMMJ), the first cannabis ETF and one of Canada’s biggest, has been “winning jackpots” because of short sellers. The first quarter of the year saw the ETF gaining 53 percent, an achievement which makes it as one of the best performings across North America.
Horizons returned more than 45 percent in the first quarter by lending out holdings to traders who are making their gamble on the hottest cannabis stocks. With this, Steve Hawkins, president, and chief executive of Horizons ETFs Management Canada, said traders now consider Horizons as the largest institutional holder of the strong players in the cannabis sector.
The next step for the ETF is to create a fund exclusive to U.S. licensed producers – something which Hawkins said should be planned carefully. Once done properly, the ETF could be home to more licensed U.S. participants as legalization continues to become widespread in the country and could, therefore, become the top performer among ETFs at that.
All told, Barclays analysts said that if marijuana is legal across all 50 states, the market would be worth $28 billion today, soaring to $41 billion by 2028. That projection suggests that there is definitely a massive market left to be addressed at the present conditions.
The biggest winner among Canadian marijuana stocks
Village Farms. The company’s share price rose 381 percent year to date after listing on the NASDAQ in February 2019. Investors have also been excited after its announcement that it is venturing into the U.S. hemp market with its partnership with Georgia-based Nature Crisp. Another biggest driver of its amazing growth is the expanded capacity of its 50 percent-owned joint venture, the Pure Sunfarms facility in British Columbia.
Even with that more than 300 percent rise of its share price, Village Farms shows no sign of stopping. As of June, the company continues to convert its greenhouses into facilities for growing marijuana. In Texas, for example, the company has about 5.7 million square feet of greenhouse facility which it has converted into marijuana plantation.
At the same time, to not to miss out on the growing hemp market following 2018 Farm Bill, Village Farms has already planted a total of 800 acres of land with hemp in three different states. It also converted about 50 percent of its 1.3 million-square-foot greenhouse in the Permian Basin for hemp planting.
Is 2019 the best time to invest in cannabis stocks and cryptocurrencies?
The year is the culmination of all breakthrough steps taken by governments in the last leg of 2018. By this time – mid-way through the year – the strongest players have announced plans designed to address the growing market for cannabis and the growing adoption for digital currencies. May it be diversifying their product portfolio or venturing out into other regions both domestically and internationally, the strongest companies have everything planned out by this time.
For the cannabis industry, if the U.S. and Canada, two of the largest economies in the world, have taken steps toward full legalization, other regions may take it as a sign that indeed it is time to embrace the previously shunned industry. Accordingly, a recent study said that regulated and illicit cannabis market combined, companies are looking into a $344-billion market left to fully addressed.
That only goes out to say that cannabis legalization may take the world by storm in the coming months or years and the year 2019 is the perfect timing to delve into the industry, both for companies and investors. The same can be said for cryptocurrencies. If companies as big as Facebook and as mainstream as Reuters and Bloomberg have delved into the digital currencies, then there is no reason for investors to hesitate about the opportunity.